IBM Institute for Business Value | Research Insights

A comparative
look at enterprise
cloud strategy
IBM Transformation Index: State of Cloud
How IBM Consulting
can help
IBM Consulting is a new partner for the new rules of
modern business. We embrace an open way of working
by bringing a diverse set of voices and technologies
together. We collaborate closely, ideate freely, and
swiftly apply breakthrough innovations that drive
exponential impact to change how business gets done.
We believe open ecosystems, open technologies, open
innovation, and open cultures are the key to opening
opportunities and the way forward for modern
business and for our world. We want to work together,
create together, and rethink what’s possible together.
For more information, please visit: ibm.com/consulting.

2

Combining hybrid cloud
with other levers of business
transformation can generate
up to 13 times greater benefits
than cloud alone.
Executive
summary
86% of organizations say they
have proven at least the initial
benefits of cloud.
One company’s satisfactory cloud value may not
be another’s. Proving the benefits is a spectrum
of value.
For many companies, the
journey to cloud summits
lacks transparency.
A snapshot of progress in various areas of cloud,
as well as in cloud transformation overall, could
help C-suite leaders map their cloud journey
more effectively.
Taking a deliberate view of cloud
progress makes sense now.
We often see a wide gap between where leaders
think their organization sits on its cloud journey, and
where it actually sits. The IBM Transformation Index
enables a deliberate view, so they can focus on the
areas of greatest business impact moving forward.
1
 Not all transformation
efforts are created equal.

Cloud is considered “table stakes” by many organizations,

but the reality is that C-suite leaders who optimize cloud for
business transformation can still create competitive advantage.

Investment in hybrid cloud, when executed end-to-end in combination with

other levers of business transformation, can generate up to 13 times greater
benefits than cloud alone.1 And the more that hybrid cloud is tightly coupled
with enterprise transformation, the greater the revenue impact of all
technology investments to the business.2

While our research shows that 86% of organizations say they have proven
at least the initial benefits of cloud, delving a bit deeper shows that “proving
the benefits” is a spectrum of value.3 Some companies are at the high end,
while others are at the low. Perhaps it depends on the bar they have set or
how familiar they are with their peer set’s cloud results. One organization’s
assessment of satisfactory cloud value may not equal another’s.

For many leaders, the journey to cloud summits lacks transparency. But
what if they had a topographical map indicating how far their organization is
from peak cloud-fueled business transformation? This snapshot of progress
in various areas of cloud—as well as in cloud transformation overall—could
help them map their journey more effectively.

The IBM Transformation Index: State of Cloud is designed to do just that.

(See Figure 1 on page 3.)

2
FIGURE 1
What is the IBM
Transformation Index:
State of Cloud
Stage of adoption
Corporate alignment
Attitude
Desired outcomes
Perceived performance
Attitude
What significance does cloud have
within the organization? How do
people within the organization view
cloud, its business potential, and its
place within corporate culture?
Corporate alignment
How deeply is cloud embedded in
the enterprise? How is the business
making structural changes to
support cloud transformation?
Desired outcomes
How likely is the company to see
itself having the resources to fulfill
a cloud strategy that will deliver
business value?
Perceived performance
How does an organization
perceive its performance and IT
effectiveness? Can cloud help
streamline staffing needs?
Cloud adoption
Behavior
Maturity
IBM
Transformation Index:
State of Cloud
Behavior
How are teams using cloud
and to what extent? Is it baked
into the business or treated
as a bolt-on?
Stage of adoption
How deeply are people embracing
cloud for workloads? Are leaders on
board and strategically involved?
Cloud adoption
What is the scale of cloud
utilization? How many types of
services are impacted? Does
technology enable business
activities and transformation?
Technology effectiveness
How effective is IT? Does it use
related modern technology in
addition to cloud?
Technology effectiveness
IT/business strategy
State of transformation
Ecosystem integration
Maturity
How far along the path of
digital transformation has
cloud adoption brought
the organization?
IT/Business strategy
Are leaders supportive? Do
organizational changes reflect
that support?
State of transformation
How does business performance
compare to the competition?
How deeply is digital transformation
impacting business transformation?
Ecosystem integration
Is cloud providing positive business
outcomes? Is it used to lower friction
and enable ecosystem integration
into the overall cloud strategy?
3
How to use the IBM Transformation
Index to assess the state of cloud
in your organization
The index allows organizations to gauge how they
fare against industry and local cloud norms over
time, by providing them the opportunity to answer
questions online in a variety of cloud areas. Based
on their answers, they will receive a score from 0
through 100, with 100 being the best score, showing
leaders where their organization sits on the cloud
transformation path. Scores are based on our
research with 3,000 executives in 12 countries
and 23 industries (see page 11 for detail on our
methodology). Several elements comprise the index,
each with its own impact/weight within the overall
tool. The elements are linked to organizational
4
attitudes, behavior, and IT maturity, revealing the
areas where teams face the biggest challenges
and opportunities.
Collectively, these elements paint a portrait of an
organization’s progress on the cloud transformation
journey. The index is timely because the cloud decisions
large companies make now will determine more than
just how they fare with cloud as a technology. We
believe they will likely impact business competitiveness
for years to come. Approaching those decisions with
anything less than a complete roadmap inhibits the
potential business value.
Perspective

Where do most
companies score?

On the 100-point IBM Transformation Index: State of Cloud, the largest number
of companies fall into the Mainstream category, indicating 43% have made
moderate progress on their cloud journey.

To date, only 27% of organizations globally have made above average progress
putting them in the index’s Advancing category.

About a third (30%) are still finding their way; these organizations are in the
index’s Emerging category.

The average score in the first IBM Transformation Index: State of Cloud survey
was 55, indicating that many organizations are making only modest progress
toward a complete cloud-enabled transformation.

100 points

Advancing
Above average progress
More than 61 points 27%

43%
Mainstream
Modest progress
50-60 points

Emerging
Still finding their way
Less than 50 points 30%

0 points

55
State of Cloud
Below is a snapshot of trends identified by the IBM Transformation
Index: State of Cloud research, conducted with more than 3,000
IT and business decision makers in 12 countries and 23 industries.
All research participants work for companies with annual revenue
over $500 million and have deep knowledge of their organization’s
cloud strategy.

Moving forward, there’s no more easy button.

Cloud complexity continues to grow. Many IT teams lack the necessary

cloud skills to manage this complexity successfully and will need to
reskill, hire for new skills, or “borrow” skills via free agents in a gig model.

Almost 7 10 out of
respondents say their organization’s IT team lacks the
skills to architect or manage cloud applications.

Leaders report multiple challenges.

Organizations face various challenges in fully integrating their workloads
across cloud environments.

Security Management Regulatory Issue Cost Customer

compliance resolution considerations preferences

6
Hybrid cloud is the model of choice.

56%
A slight majority of companies have now
embraced hybrid cloud. We expect this trend
to continue as 80% are moving workloads
from public clouds back to some form of Hybrid cloud
private infrastructure. Top reasons are to

32%
improve performance and latency, security,
and compliance.

56%
Multicloud

of respondents have already adopted

hybrid cloud while 32% have selected
a multicloud approach.
8%
Public cloud

80%
are moving workloads from public cloud
4%
Private cloud
back to some form of private infrastructure.

Ecosystems demand a ticket for admission. It’s cloud.

52%
of respondents consider integration of
TI

d
business ecosystem partners into cloud
CK

as highly important for business success.

u
ET

Clo Ad
m is sion
TI
CK
ET

Cloud will continue to march forward, despite

challenges with holistic integration and skills.
Leading ecosystems enable information to flow
between innovation partners within different
enterprises, enabled by cloud.

7
Take a deliberate view of your
cloud-enabled transformation
To help your enterprise advance its cloud-enabled
transformation journey, the first step is to assess
where you are. The IBM Transformation Index: State
of Cloud is intended to provide your leadership team
with a clear view of where your organization actually
sits, versus where they may think it sits—we often
see a wide gap between the two.
When you have a clear picture of the current state
of cloud in your company, that’s when you can
begin to focus on the areas that show the greatest
opportunity for a positive shift.
Action items will differ from company to company,
but a few common actions generally apply:
8
01
Consider deep cloud
Many companies are experiencing diminishing
returns from current and conventional technology
adoption programs.4 Look for classic signs that
efforts to convert digital technology into business
value are failing: Are you doubling down with
more programs? Are teams working nights and
weekends? Conventional, cost-optimizing cloud,
data, software, and AI adoption delivers
incremental improvements because it’s designed
to do so. Material improvements require a
redesigned system. Deep cloud proposes that
if you want to make material improvements in
how your core business performs, you begin by
applying cloud to the most business-critical value
streams in your enterprise.
02
Avoid bolt-ons
When developing any new business strategy, bake
hybrid cloud in—don’t treat it as an afterthought.
From a cloud perspective, treat the business
ecosystem holistically. Design ventures that
integrate partners into the cloud environment.
03
Create more seats at the table
Ensure cross-functional inputs when designing a
cloud transformation strategy. Give both business
and IT equal seats at the table in technology
decision-making. Create a roadmap that reflects
learnings from across the organization.
04
Insist on zero trust security
Creating security for a world in which breaches are
a given means approaching security from multiple
fronts simultaneously. Adopt leading security
practices across the organization, not in silos. Apply
zero trust security concepts to defend connections
among ecosystem partners, allowing them to better
capitalize on cloud investments.
When you have a clear, unbiased view into the state
of your cloud-enabled transformation, that’s when
real progress can begin—component by component,
with great precision, to avoid wasted effort. The IBM
Transformation Index: State of Cloud can show your
teams where focused energy is necessary to drive
greater business value.
9
About Research Insights The right partner for
a changing world
Research Insights are fact-based strategic insights
for business executives on critical public- and
At IBM, we collaborate with our clients, bringing
private-sector issues. They are based on findings
together business insight, advanced research,
from analysis of our own primary research studies.
and technology to give them a distinct advantage
For more information, contact the IBM Institute for
in today’s rapidly changing environment.
Business Value at iibv@us.ibm.com

IBM Institute for Business Value

For two decades, the IBM Institute for Business
Value has served as the thought leadership
think tank for IBM. What inspires us is producing
research-backed, technology-informed strategic
insights that help leaders make smarter business
decisions.

From our unique position at the intersection of

business, technology, and society, we survey,
interview, and engage with thousands of
executives, consumers, and experts each year,
synthesizing their perspectives into credible,
inspiring, and actionable insights.

To stay connected and informed, sign up to

receive IBV’s email newsletter at ibm.com/ibv.
You can also follow @IBMIBV on Twitter or find
us on LinkedIn at https://ibm.co/ibv-linkedin.

10
Related Reports
Mastering hybrid cloud
IBM Institute for Business Value. May 2022.
ibm.com/thought-leadership/institute-business-
value/en-us/report/mastering-hybrid-cloud
The deep cloud alternative: Getting
to the heart of business performance
IBM Institute for Business Value. August 2022.
ibm.com/thought-leadership/institute-business-
value/en-us/report/deep-cloud
Cloud’s next leap: How to create
transformational business value
IBM Institute for Business Value. February 2022.
ibm.com/thought-leadership/institute-business-
value/en-us/report/cloud-transformation
Research and analysis methodology
This anonymous survey was conducted online in
12 countries and across 15 industries by The Harris
Poll on behalf of IBM and the IBM Institute for Business
Value (IBV) from June 8, 2022 to July 17, 2022. The
survey was conducted among 3,014 IT and business
decision makers in companies with annual revenue
over $500 million who have deep knowledge of their
organization’s cloud strategy. The IBM Transformation
Index: State of Cloud was developed by combining the
data from 25+ question batteries of various formats
across nine cloud-related dimensions that were
informed by input from industry experts.
11
Endnotes
1 Payraudeau, Jean-Stéphane, Anthony Marshall,
and Jacob Dencik, Ph.D. “Unlock the business
value of hybrid cloud: How the Virtual Enterprise
drives revenue growth and innovation.” IBM
Institute for Business Value. July 2021.
https://ibm.co/hybrid-cloud-business-value

2 Ibid

3 In cooperation with Harris Insights and Analytics,

the IBM Institute for Business Value (IBV) surveyed
3,014 executives in 12 countries and 23 industries
from June 8, 2022 to July 17, 2022. All data in this
document is from that research unless otherwise
indicated.

4 Benore, Michael, Philip Dalzell-Payne, Bala

Rajaraman, Richard Warrick, and Chris Brown.
“The deep cloud alternative: Getting to the heart of
business performance.” IBM Institute for Business
Value. August 2022. https://ibm.co/deep-cloud

12
© Copyright IBM Corporation 2022

IBM Corporation
New Orchard Road
Armonk, NY 10504

Produced in the United States of America | September 2022

IBM, the IBM logo, ibm.com and Watson are trademarks of

International Business Machines Corp., registered in many
jurisdictions worldwide. Other product and service names might
be trademarks of IBM or other companies. A current list of IBM
trademarks is available on the web at “Copyright and trademark
information” at: ibm.com/legal/copytrade.shtml.

This document is current as of the initial date of publication and

may be changed by IBM at any time. Not all offerings are
available in every country in which IBM operates.

THE INFORMATION IN THIS DOCUMENT IS PROVIDED “AS IS”

WITHOUT ANY WARRANTY, EXPRESS OR IMPLIED, INCLUDING
WITHOUT ANY WARRANTIES OF MERCHANTABILITY, FITNESS
FOR A PARTICULAR PURPOSE AND ANY WARRANTY OR
CONDITION OF NON-INFRINGEMENT. IBM products are
warranted according to the terms and conditions of the
agreements under which they are provided.

This report is intended for general guidance only. It is not

intended to be a substitute for detailed research or the exercise
of professional judgment. IBM shall not be responsible for any
loss whatsoever sustained by any organization or person who
relies on this publication.

The data used in this report may be derived from third-party

sources and IBM does not independently verify, validate or audit
such data. The results from the use of such data are provided on
an “as is” basis and IBM makes no representations or
warranties, express or implied.

MWEMP0NJ-USEN-02 13